In a guest post for the Online Journalism Blog, Shane Redlick shares his experiences of launching two hyperlocal startups – one, launched 5 years ago, based on a traditional advertising model. The second – launched this year – seeking to innovate with a broker-based model and crowdsourcing technologies.

2005: Opinion 250 News

In 2005, myself along with 2 partners launched the hyperlocal startup Opinion 250 News in Prince George, British Columbia (Canada). Myself and my company performed technical development, admin and financial tasks, while the other 2 partners (long time media industry people/semi-retired) did all the reporting and managed a small team of topical/weekly writers.

All content is original for local news. We had a lot going for us and we managed to make some good gains in the first year. To date the company is profitable and can pay modest salaries for those involved. But it has taken the better of 4 years to reach that point.

The effect we were having locally was significant (read comments to story here, for instance). The biggest challenge for us was building monthly ad revenue.

We did not sell on CPC or CPM basis. It was a flat monthly cost. We had a couple of people selling the ads and we had quite a bit of local good will and resulting support via ads. Even with a lot going for us however, this was a big challenge. In fact in the first month, when we launched, we’d sold nearly $10,000 CAD (monthly recurring) in ads.

2007: An alternative method for journalists to drive revenue

In 2007, while reflecting on the first couple of years along with suggestions to provide sites in other cities, I set about brainstorming ideas on how to provide a platform to specifically equip journalists in their cities to do what we were doing at Opinion 250. However, with a difference.

From experience, I knew that the challenge to sell ads (or possibly subscriptions) was big and that a lone journalist striking out on their own had the odds highly stacked against them of building a profitable news business.

So, in addition to providing a turn-key technical platform, purpose built for local news businesses, we wanted to develop an alternative method for those journalists to drive revenue.

What we came up with (after many discussions, challenges and adjustments) is the Locally Informed Marketplace. We thought that rather than engaging in selling, we’d find a way to leverage the journalist’s biggest asset, which is their readers and following. An active community of people reading and engaging in discussion via comments, etc could be asked to engage in a 3rd type of activity, in a form of ‘Local Crowdsourcing’.

We’ve applied principles that Jeff Howe has discussed in his book along with examples found at the likes of innocentive.com and 99designs.com, adapted and applied in a local way.

Readers now engage other readers directly to help them 1) solve challenges (ask questions/get answers) a type of local knowledge sharing and 2) get jobs done (post mini-tenders and get people bidding on jobs).

Journalists as a result, earn revenue by charging listing fees for both the challenges and jobs.

Finally, and without getting into too much detail, all three areas of the platform: News, Information (local wiki) and Marketplace are tied together with a form of website currency called “Credits” those credits are either earned (by readers posting stories that become very popular) or purchased with real currency.

2010: The biggest challenge

Easily our biggest challenge has been in developing the local crowdsourcing marketplace.

Applying the crowdsourcing principles at a local level in this way has never been tried. It’s our answer to the question of how local news can move beyond selling advertisements or subscriptions.

This is a big challenge that a lot of smart people are working on. So, to say we’ve found a solution is a big claim and a big challenge to prove.

We’ve asked a lot of questions of some smart people, which has seemed to be the best way to help shape our ideas. For example, the Marketplace was originally going to be a type of ‘web store for rent’ for local businesses. What we’ve now developed as the Marketplace blows the socks off of that.

We’ve also learned how much time it takes to develop such a platform. We’ve been 1 ½ years full time development to get to this point. A further year prior to that was spent developing the initial ideas and securing series A investment.

Next, we plan to engage one-on-one with the journalists who begin to start using the Locally Informed platform. There’s still much to learn and to develop and it’s now time for the feedback of those first few brave journalists to shape its direction forward.